Abbott sets up carbon tax trigger

Tony Abbott will allow public consultation on the carbon legislation until November 4 and then introduce the final legislation when Parliament begins on November 12.
AFR

by
Phillip Coorey | Chief political correspondent

The legislation to repeal the carbon tax has been deliberately designed to give the Abbott government a trigger for a double dissolution election within 12 months if it is rejected by the current Senate and then the incoming Senate.

Signed off by federal cabinet on Tuesday, the draft legislation also provides the Australian Competition and Consumer Commission with sweeping new powers to ensure electricity and gas suppliers pass on to consumers respective deductions of 9 per cent and 7 per cent if the carbon tax is repealed.

The ACCC will have the power to monitor energy prices six months before the scheduled repeal on July 1, 2014, and for 12 months beyond that.

If the ACCC determines “the price for the supply is unreasonably high" it can issue fines of up to $1.1 million for corporations and $220,000 for individuals as well as institute damages claims, injunctions, order refunds and even limit prices.

Opposition to abolishing price on carbon

In an escalation of the political stakes, Mr Abbott will allow public consultation on the carbon legislation until November 4 and then introduce the final legislation when Parliament begins on November 12 for four weeks. He said Labor should “repent’’ for the carbon tax and believed Opposition Leader Bill Shorten would put pragmatism before policy principle.

But with Labor and the Greens in control of the existing Senate and both opposed to abolishing a price on ­carbon, the legislation is set to be rejected at least once before the new Senate sits on July 1, 2014.

To provide a trigger for a double dissolution election, the same bill must be rejected by the Senate twice, with three months in between each rejection.

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The Australian Financial Review has learned the legislation has been deliberately written so not a word needs to be changed should it need to be put to the Senate again after July 1, 2014, when the new Senate sits.

If the current Senate rejects it once, and then the new Senate rejects it again, the same bill would have been rejected twice and Mr Abbott would have his trigger. If it were passed by the new ­Senate, the legislation would be automatically retrospective, meaning the carbon tax would end on July 1, 2014.

“The government will not extend the carbon tax beyond 2013-14, even if the Parliament does not pass the carbon tax repeal bills until after July 1, 2014,’’ the legislation says.

Negotiating with Palmer

The design aims to put pressure on the new Senate as much as the current Senate. This includes Clive Palmer’s Palmer United Party which will hold the whip hand in the new Senate, and with whom Mr Abbott would have to negotiate.

Mr Abbott would need the support of six of the eight micro-party and independent senators who will share the balance of power in the new Senate and Mr Palmer will control between three and four of these eight votes.

He has already demanded that in return for abolishing the carbon tax, the government reimburse the $10 billion it would have collected in carbon tax last financial year and this financial year.

Mr Abbott made it clear he would not be agreeing to Mr Palmer’s conditions and the legislation spells out that Mr Palmer must pay his carbon tax for last year and this year, by providing enforcement powers “for as long as is necessary’’ to the Clean Energy ­Regulator, the Australian Tax Office, Customs and the Department of the Environment.

“Liable businesses and other entities must pay all carbon tax liabilities incurred up to June 30, 2014," it says.

Mr Abbott insisted that Labor would crumble before July 1 next year because new leader Bill Shorten would put ­political pragmatism before principle.

“We are confident that the public pressure on the Labor Party will be such that they will not defy the mandate of the Australian people at the election. Let’s not forget that if this election was about anything, it was about the carbon tax," he said.

“The new leader of the Labor Party is nothing if not a political pragmatist – he is nothing if not a political survivor."

Labor won’t back down

He all but confirmed that Labor would seek to amend Mr Abbott’s legislation to reflect Labor’s view that the fixed-price carbon tax should be ­abolished a year earlier than scheduled on July 1, 2014, and replaced with an emissions trading scheme with a floating price tied to that in Europe.

“Labor stands by its election commitment to support the termination of the carbon tax provided that a market-based mechanism that reduces carbon pollution is put in its place, along with a strong commitment to expanding renewable energy,’’ Mr Butler said.

“We won’t back down on acting on climate change."

The Australian Industry Group ­welcomed the release of the draft legislation but warned there were difficult transitional issues involved in unravelling the policy and adopting the ­Coalition’s direct action policy in which polluters would be paid from the budget in return for reducing ­emissions.

Chief executive Innes Willox said his members would need longer to consult than the November 4 deadline allowed.